A publicly traded corporation announces a $2.2 billion quarterly loss, a dividend cut and warns that steeper losses are sure to come. One might expect such a company’s stock to go down on such dire news. But not Fannie Mae! On the very day Fannie revealed nothing but bad performance news to investors, its stock went up 9% to $30.81. How is this possible? We’ll give you a hint: big government market intervention is involved. The New York Times explains: “Their optimism stemmed from the belief that Fannie Mae is …
This week the House is set to pass legislation to help homeowners who spent too much on their homes avoid foreclosure. From the beginning, the bill’s architects have been ambivalent about how many people their plan would actually help. Over a month ago Rep. Barney Frank told The Hill it was “irrelevant” how many people would actually be helped by his plan: “I would hope a million [would benefit]. It’s irrelevant. There’s no downside. Why not try?” Well even that one million Frank hoped to help was overly optimistic. The …
With President Bush’s letter to Speaker Nancy Pelosi Wednesday and John McCain’s speech in Brooklyn yesterday, now all three presidential candidates and the White House are supporting plans that would expose taxpayers to hundreds of billions of dollars in housing market risk. All three plans would set extremely bad precedents in housing policy, would only encourage future bad lending behavior, and are completely unnecessary considering the strong success of other voluntary federal efforts. The basics behind each plan are essentially the same. Under the plans supported by the Democrats and …
Sen. Hillary Clinton yesterday threw her weight behind a plan by Rep. Barney Frank (D-Mass.) and Sen. Chris Dodd (D-Conn.) to authorize the Federal Housing Administration (FHA) spend $20 billion in taxpayer money to guarantee up to $400 billion in questionable mortgages. Considering Sen. Barack Obama is already a co-sponsor of Dodd’s legislation, and the House has already scheduled hearings on the bill, the plan is likely to become the front line in Congress’ fight to “do something” about the current financial instability. Under the Frank-Dodd bill, lenders that chose …
